Q1 2026 BCP Investment Corp Earnings Call

May 8, 2026

Operator: Conference call. An earnings press release was distributed yesterday, 7 May, after market close. A copy of the release, along with an earnings presentation, is available on the company's website at www.bcpinvestmentcorporation.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC. BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law.

Speaker #1: Conference call. An earnings press release was distributed yesterday, May 7th, after market close. A copy of the release along with an earnings presentation is available on the company's website, at www.bcpinvestmentcorporation.com, in the Investor Relations section, and should be reviewed in conjunction with the company's Form 10Q filed yesterday with the SEC.

Speaker #1: As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results, and involve a number of risks and uncertainties.

Operator: Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC. BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law.

Speaker #2: A copy of the release along with an earnings presentation is available on the company's website at www.bcpinvestmentcorporation.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC.

Speaker #1: Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.

Speaker #1: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer, and Patrick Schafer, Chief Investment Officer.

Speaker #2: As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results, and involve a number of risks and uncertainties.

Operator: Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer, and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Speaker #2: Actual results may differ materially from those in the forward-looking statements, as a result of a number of factors, including those described in the company's filings with the SEC.

Speaker #1: With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Speaker #2: Good morning. Welcome to our first quarter 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer.

Ted Goldthorpe: Good morning. Welcome to our Q1 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer. Following my opening remarks on the company's performance and activities during the Q1, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail. 2025 was an important year of execution for us, we entered 2026 on stronger footing. The key strategic and shareholder-focused actions we outlined in connection with the Logan Ridge merger are now largely in place, including our rebranding, tender offer, share repurchase program, and transition to monthly dividends while preserving flexibility for the quarterly supplemental distributions. We also executed liability management actions that diversified our funding base and extended our maturity profile.

Speaker #2: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation; Brandon Satoren, Chief Financial Officer; and Patrick Schafer, Chief Investment Officer.

Speaker #2: Following my opening remarks on the company's performance and activities, during the first quarter, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail.

Speaker #2: With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Speaker #2: 2025 is an important year of execution for us, and we entered 2026 on stronger footing. The key strategic and shareholder-focused actions we outlined in connection with the Logan Ridge merger are now largely in place, including our rebranding, tender offer, share repurchase program, and transition to monthly dividends, while preserving flexibility for the quarterly supplemental distributions.

Ted Goldthorpe: The key strategic and shareholder-focused actions we outlined in connection with the Logan Ridge merger are now largely in place, including our rebranding, tender offer, share repurchase program, and transition to monthly dividends while preserving flexibility for the quarterly supplemental distributions. We also executed liability management actions that diversified our funding base and extended our maturity profile.

Speaker #2: Good morning. Welcome to our first quarter, 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer.

Speaker #2: Following my opening remarks on the company's performance and activities during the first quarter, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail.

Speaker #2: We also executed liability management actions that diversified our funding base and extended our maturity profile. Taken together, these actions have improved our financial flexibility, reduced near-term refinancing risk, and better positioned the company to support a more consistent shareholder return framework and long-term value creation.

Ted Goldthorpe: Taken together, these actions have improved our financial flexibility, reduced near-term refinancing risk, and better position the company to support more consistent shareholder return framework and long-term value creation. During the quarter, we continued to execute against our plan and deliver growth in both total investment income and core investment income relative to the prior quarter and Q1 2025. We generated net investment income of $6.9 million or $0.55 per share, which exceeded our base distribution, and our share repurchase activity in Q1 2026 was accreted to NAV by $0.07 per share. We also saw improvement in underlying credit performance, with non-accruals declining to 6.2% of the portfolio at amortized cost from 7.1% in the prior quarter, and the number of portfolio companies on non-accrual declining to 9 from 10.

Speaker #2: During the quarter, we continued to execute against our plan and delivered growth in both total investment income and core investment income, relative to the prior quarter and first quarter of 2025.

Speaker #2: We generated net investment income of $6.9 million or 55 cents per share, which exceeded our base distribution and our share repurchase activity in the first quarter of 2026 was accreted to NAV by 7 cents per share.

Ted Goldthorpe: We generated net investment income of $6.9 million or $0.55 per share, which exceeded our base distribution, and our share repurchase activity in Q1 2026 was accreted to NAV by $0.07 per share. We also saw improvement in underlying credit performance, with non-accruals declining to 6.2% of the portfolio at amortized cost from 7.1% in the prior quarter, and the number of portfolio companies on non-accrual declining to nine from 10.

Speaker #2: We also saw improvement in underlying credit 6.2% of the portfolio at amortized cost, from 7.1% in the prior quarter and the number of portfolio companies on non-accrual declining to 9 from 10.

Speaker #2: During the quarter, we continue to execute against our plan and deliver growth in both total investment income and core investment income, relative to the prior quarter and first quarter of 2025.

Speaker #2: Reflecting that earnings profile, our board declared a supplemental cash distribution of 3 cents per share for the second quarter bringing total second quarter distributions to 30 cents per share.

Ted Goldthorpe: Reflecting that earnings profile, our board declared a supplemental cash distribution of $0.03 per share for Q2, bringing total Q2 distributions to $0.30 per share. Our board approved a Q3 2026 base distribution of $0.27 per share, payable in monthly installments of $0.09 per share in July, August, and September. With our monthly dividend structure now in place and the first monthly distribution paid in April, we believe this framework provides shareholders with a more regular cadence of cash distributions while maintaining flexibility to declare supplemental distributions when supported by earnings. We also continue to enhance our capital structure through proactive liability management.

Speaker #2: In addition, our board approved a third quarter 2026 base distribution of 27 cents per share payable in monthly installments of 9 cents per share in July/August and September.

Speaker #2: We also saw improvement in underlying credit performance, with non-accruals declining to 6.2% of the portfolio amortized cost from 7.1% in the prior quarter, and the number of portfolio companies on non-accrual declining to 9 from 10.

Speaker #2: With our monthly dividend structure now in place, and the first monthly distribution paid in April, we believe this framework provides shareholders with a more regular cadence of cash distributions while maintaining flexibility to declare supplemental distributions when supported by earnings.

Ted Goldthorpe: With our monthly dividend structure now in place and the first monthly distribution paid in April, we believe this framework provides shareholders with a more regular cadence of cash distributions while maintaining flexibility to declare supplemental distributions when supported by earnings. We also continue to enhance our capital structure through proactive liability management.

Speaker #2: Reflecting that earnings profile, our board declared a supplemental cash distribution of $0.03 per share for the second quarter bringing total second quarter distributions to $0.30 per share.

Speaker #2: We also continue to enhance our capital structure through a proactive liability management. During the first quarter, we issued 50 million of 7.5% notes due 2029 and in April used a portion of the proceeds to redeem 40 million of the LFRC 5.25% notes due 2026.

Ted Goldthorpe: During Q1, we issued $50 million of 7.5% notes due 2029, and in April, used a portion of the proceeds to redeem $40 million of the LRFC 5.25% notes due 2026. These actions further diversified our funding base, extended our maturity profile, and enhanced our financial flexibility. Turning to net asset value. Net asset value declined during the quarter, driven primarily by unrealized markdowns on our portfolio. Approximately 40% of the Q1's unrealized markdowns were attributable to investments classified as software and our consolidated scheduled investments, and approximately 70% when including software or AI-exposed names. Furthermore, 70% of these markdowns are from portfolio investments without at least one publicly quoted security, which negatively impacted the valuation of all securities in the capital structure.

Speaker #2: In addition, our board approved a third quarter 2026 base distribution of $0.27 per share, payable in monthly installments of $0.09 per share in July, August, and September.

Speaker #2: These actions further diversified our funding base, extended our maturity profile, and enhanced our financial flexibility. Turning to net asset value, net asset value declined during the quarter driven primarily by unrealized markdowns on our portfolio.

Speaker #2: Approximately 40% of the quarter's unrealized markdowns were attributable to investments classified as software and our consolidated scheduled investments, and approximately 70% when including software or AI exposed names.

Ted Goldthorpe: Approximately 40% of the Q1's unrealized markdowns were attributable to investments classified as software and our consolidated scheduled investments, and approximately 70% when including software or AI-exposed names. Furthermore, 70% of these markdowns are from portfolio investments without at least one publicly quoted security, which negatively impacted the valuation of all securities in the capital structure.

Speaker #2: We also continue to enhance our capital structure through proactive liability management. During the first quarter, we issued $50 million of $7.5% notes due 2029 and in April used a portion of the proceeds to redeem $40 million of the LFRC 5.25% notes due 2026.

Speaker #2: Furthermore, 70% of these markdowns are from portfolio investments without at least one publicly quoted security, which negatively impacted the valuation of all securities in the capital structure.

Speaker #2: We believe the majority of these markdowns reflect sector-specific valuation pressure and broader mid-market dislocation rather than fundamental credit deterioration. Importantly, underlying credit performance remained relatively stable as most of our software exposure is in mission-critical vertically specialized businesses that we believe are well-positioned to weather the current AI-driven uncertainty.

Ted Goldthorpe: We believe the majority of these markdowns reflect sector-specific valuation pressure and broader mid-market dislocation rather than fundamental credit deterioration. Importantly, underlying credit performance remained relatively stable as most of our software exposure is in mission-critical, vertically specialized businesses that we believe are well-positioned to weather the current AI-driven uncertainty. Despite continued macroeconomic uncertainty and volatility in portions of the software market, we remain disciplined in our deployment across the lower middle market, prioritizing credit quality, strong documentation, and downside protection. We continue to see more attractive opportunities in smaller and more complex transactions where structure and selectivity are critical, and we are actively managing and reposition the portfolio in response to evolving market conditions.

Speaker #2: Despite continued macroeconomic uncertainty and volatility in portions of the software market, we remain disciplined in our deployment across the lower middle market, prioritizing credit quality, strong documentation, and downside protection.

Ted Goldthorpe: Despite continued macroeconomic uncertainty and volatility in portions of the software market, we remain disciplined in our deployment across the lower middle market, prioritizing credit quality, strong documentation, and downside protection. We continue to see more attractive opportunities in smaller and more complex transactions where structure and selectivity are critical, and we are actively managing and reposition the portfolio in response to evolving market conditions.

Speaker #2: We believe the majority of these markdowns reflect sector-specific valuation pressure and broader mid-market dislocation rather than fundamental credit deterioration. Importantly, underlying credit performance remained relatively stable as most of our software exposure is in mission-critical, vertically specialized businesses that we believe are well-positioned to weather the current AI-driven uncertainty.

Speaker #2: We continue to see more attractive opportunities in smaller and more complex transactions where structure and selectivity are critical, and we are actively managing and repositioning the portfolio in response to evolving market conditions.

Speaker #2: Competition remains more pronounced in larger and more commoditized transactions which reinforces our focus on selectivity over volume. As we look ahead, we remain focused on active portfolio management, discipline underwriting, and prudent capital allocation, with the goal of driving long-term value for shareholders.

Ted Goldthorpe: Competition remains more pronounced in larger and more commoditized transactions, which reinforces our focus on selectivity over volume. As we look ahead, we remain focused on active portfolio management, disciplined underwriting, and prudent capital allocation, with the goal of driving long-term value for shareholders. As of the last quarter, we've begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026. With that, I will turn the call over to Patrick Schaeffer, our Chief Investment Officer, for a review of our investment activity.

Speaker #2: As noted last quarter, we have begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026.

Ted Goldthorpe: As of the last quarter, we've begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026. With that, I will turn the call over to Patrick Schaeffer, our Chief Investment Officer, for a review of our investment activity.

Speaker #2: With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Speaker #3: Thanks, Ted. Before getting into the specifics of the quarter, I would like to make a few comments on our core market as a whole.

Patrick Schafer: Thanks, Ted. Before getting into the specifics of the quarter, I would like to make a few comments on our core market as a whole. Deal activity has remained fairly active and orderly over the course of 2026, despite public headlines around private credit, software, and AI. Excluding the software sector, the M&A markets and private credit markets remain wide open for business, and we continue to see attractive opportunities in both our sponsor and non-sponsor segments. With respect to software, we do continue to see certain high-quality software businesses being acquired and financed with minor lender concessions relative to 2025 transactions.

Speaker #3: Deal activity has remained fairly active and orderly over the course of 2026, despite public headlines around private credit, software, and AI. Excluding the software sector, the M&A markets and private credit markets remain wide open for business, and we continue to see attractive opportunities in both our sponsor and non-sponsor segments.

Speaker #2: As noted last quarter, we have begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026.

Speaker #3: With respect to software, we do continue to see certain high-quality software businesses being acquired and financed with minor lender concessions relative to 2025 transactions.

Patrick Schafer: With respect to software, we do continue to see certain high-quality software businesses being acquired and financed with minor lender concessions relative to 2025 transactions.

Speaker #2: With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Speaker #3: Thanks, Ted. Before getting into the specifics of the quarter, I would like to make a few comments on our core market as a whole.

Speaker #3: Regardless of industry, we continue to focus on our core market of 15 to 50 of EBITDA in industries or business models where we have an edge and ideally non-sponsored or non-traditionally sponsored transactions, where competition is lower and we have the ability to drive pricing and structure.

Patrick Schafer: Regardless of industry, we continue to focus on our core markets of 15 to 50 of EBITDA in industries or business models where we have an edge and ideally non-sponsored or non-traditionally sponsored transactions where competition is lower and we have the ability to drive pricing and structure. During the Q1 2026, our investment activity remained measured and selective. We completed 2 new portfolio investments and 1 follow-on investment during the period. At the same time, we experienced a higher level of repayments and sales, which we believe is consistent with a more active realization environment and the increased M&A activity that Ted and myself mentioned earlier. As a result, originations for the quarter were $13.3 million, and repayments and sales were $28.3 million, resulting in net repayments and sales of approximately $15 million.

Speaker #3: During the first quarter of 2026, our investment activity remained measured and selective. We completed two new portfolio investments and one follow-on investment during the period.

Speaker #3: With respect to software, we do continue to see certain high-quality software businesses being acquired and financed with minor lender concessions relative to 2025 transactions.

Speaker #3: At the same time, we experienced a higher level of repayments and sales which we believe is consistent with a more active realization environment and the increased M&A activity that Ted and myself mentioned earlier.

Patrick Schafer: At the same time, we experienced a higher level of repayments and sales, which we believe is consistent with a more active realization environment and the increased M&A activity that Ted and myself mentioned earlier. As a result, originations for the quarter were $13.3 million, and repayments and sales were $28.3 million, resulting in net repayments and sales of approximately $15 million.

Speaker #3: As a result, originations for the quarter were $13.3 million, and repayments and sales were $28.3 million. Resulting in net repayments and sales of approximately $15 million.

Speaker #3: Turning to slide 11 of our presentation, the overall yield on par of new investments during the quarter was 10.7%. This compares to 12.8% weighted average annualized yield excluding income from non-accruals and collateralized loan obligations as of March 31, 2026.

Patrick Schafer: Turning to slide 11 of our presentation, the overall yield on par of new investments during the quarter was 10.7%. This compares to 12.8% weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations as of 31 March 2026. Given the limited number of transactions completed during the quarter, we view the yield on new investments in the context of the specific mix of deals executed rather than as a broader indicator of the opportunity set. Our focus remains on credit quality, structure, and overall risk-adjusted return. Our investment portfolio as of 31 March 2026 remained highly diversified. We ended the quarter with a debt investment portfolio, excluding our investments in CLO funds, equities, and joint ventures, spread across 72 different portfolio companies and 33 different industries, with an average par balance of $3.3 million per investment.

Speaker #3: During the first quarter of 2026, our investment activity remained measured and selective. We completed two new portfolio investments and one follow-on investment during the period.

Speaker #3: Given the limited number of transactions completed during the quarter, we view the yield on new investments in the context of the specific mix of deals executed rather than as a broader indicator of the opportunity set.

Speaker #3: As a result, originations for the quarter were $13.3 million, and repayments and sales were $28.3 million. Resulting in net repayments and sales of approximately $15 million.

Speaker #3: Our focus remains on credit quality, structure, and overall risk-adjusted return. Our investment portfolio as of March 31, 2026, remained highly diversified. We ended the quarter with a debt investment portfolio excluding our investments in CLO funds, equities, and joint ventures spread across 72 different portfolio companies and 33 different industries, with an average par balance of 3.3 million per investment.

Patrick Schafer: Our focus remains on credit quality, structure, and overall risk-adjusted return. Our investment portfolio as of 31 March 2026 remained highly diversified. We ended the quarter with a debt investment portfolio, excluding our investments in CLO funds, equities, and joint ventures, spread across 72 different portfolio companies and 33 different industries, with an average par balance of $3.3 million per investment.

Speaker #3: Turn to slide 11 of our presentation. The overall yield on par of new investments during the quarter was 10.7%. This compares to 12.8% weighted average annualized yield excluding income from non-accruals and collateralized loan obligations as of March 31, 2026.

Speaker #3: Turning to slide 11, we saw improvement in our non-accrual profile during the quarter reflecting improved underlying credit performance. At the end of the quarter, we had 12 investments on non-accrual status attributable to nine portfolio companies, representing 2.6 and 6.2% of the portfolio at fair value and cost, respectively.

Patrick Schafer: Turning to slide 11, we saw improvement in our non-accrual profile during the quarter, reflecting improved underlying credit performance. At the end of the quarter, we had 12 investments on non-accrual status attributable to 9 portfolio companies, representing 2.6% and 6.2% of the portfolio at fair value and cost, respectively. This compares to 13 investments attributable to 10 portfolio companies on non-accrual status as of 31 December 2025, representing 4% and 7.1% of the portfolio at fair value and cost, respectively. On slide 12, excluding our non-accrual investments, we had an aggregate debt investment portfolio of $371.8 million at fair value, representing a blended price of 90.3% of par value, and 81.3% of that portfolio was comprised of first lien loans at par value.

Patrick Schafer: Turning to slide 11, we saw improvement in our non-accrual profile during the quarter, reflecting improved underlying credit performance. At the end of the quarter, we had 12 investments on non-accrual status attributable to nine portfolio companies, representing 2.6% and 6.2% of the portfolio at fair value and cost, respectively. This compares to 13 investments attributable to 10 portfolio companies on non-accrual status as of 31 December 2025, representing 4% and 7.1% of the portfolio at fair value and cost, respectively. On slide 12, excluding our non-accrual investments, we had an aggregate debt investment portfolio of $371.8 million at fair value, representing a blended price of 90.3% of par value, and 81.3% of that portfolio was comprised of first lien loans at par value.

Speaker #3: Our focus remains on credit quality, structure, and overall risk-adjusted return. Our investment portfolio, as of March 31, 2026, remained highly diversified. We ended the quarter with a debt investment portfolio excluding our investments in CLO funds, equities, and joint ventures, spread across 72 different portfolio companies, and 33 different industries, with an average power balance of 3.3 million dollars per investment.

Speaker #3: This compares to 13 investments attributable to 10 portfolio companies on non-accrual status as of December 31, 2025, representing 4% and 7.1% of the portfolio at fair value and cost, respectively.

Speaker #3: On slide 12, excluding our non-accrual investments, we had an aggregate debt investment portfolio of $371.8 million at fair value, representing a blended price of 90.3% of par value, and 81.3% of that portfolio was comprised of first-line loans at par value.

Speaker #3: Turn to slide 11. We saw improvement in our non-accrual profile during the quarter, reflecting improved underlying credit performance. At the end of the quarter, we had 12 investments on non-accrual status attributable to nine portfolio companies, representing 2.6% and 6.2% of the portfolio at fair value and cost, respectively.

Speaker #3: Assuming par recovery, our March 31, 2026, fair values imply approximately 40.1 million of incremental net value, or a 20.8% increase to net. Applying an illustrative 10% default rate and 70% recovery rate, the debt portfolio would imply approximately $2.24 per share of incremental net, or a 14.4% increase as it rotates.

Patrick Schafer: Assuming par recovery, our 31 March 2026 fair values imply approximately $40.1 million of incremental net value or a 20.8% increase to NAV. Applying an illustrative 10% default rate and 70% recovery rate, the debt portfolio would imply approximately $2.24 per share of incremental NAV or a 14.4% increase as it rotates. I'll now turn the call over to Brandon to further discuss our financial results for the period.

Speaker #3: On slide 12, excluding our non-accrual investments, we had an aggregate debt investment portfolio of $371.8 million at fair value, representing a blended price of $90.3% of par value, and $81.3% of that portfolio was comprised of first-line loans at par value.

Speaker #3: Acknowledging the call over to Brandon to further discuss our financial results for the period.

Speaker #4: Thanks, Patrick. For the quarter ended March 31, 2026, the company generated 17.6 million in investment income. An increase of 0.1 million as compared to 17.5 million reported for the quarter ended December 31, 2025.

Brandon Satoren: Thanks, Patrick. For the quarter ended 31 March 2026, the company generated $17.6 million in investment income, an increase of $0.1 million as compared to $17.5 million reported for the quarter ended 31 December 2025. For the same period, expenses were $10.7 million, a $0.6 million increase as compared to $10.1 million reported for the prior quarter. The increase in expenses was primarily due to the increase in incentive fees driven by higher investment income in the current quarter, as well as elevated general and administrative expenses.

Speaker #3: Assuming par recovery, our March 31, 2026, fair values imply approximately $40.1 million of incremental net value, or a 20.8% increase to NAV. Applying an illustrative 10% default rate and 70% recovery rate, the debt portfolio would imply approximately $2.24 per share of incremental NAV, or a 14.4% increase as it rotates.

Speaker #4: For the same period, expenses were 10.7 million. A 0.6 million increase as compared to 10.1 million reported for the prior quarter. The increase in expense was primarily due to the increase in incentive fees driven by higher investment income in the current quarter, as well as elevated general and administrative expenses.

Speaker #3: Acknowledging the call over to Brandon, to further discuss our financial results for the period.

Speaker #1: Thanks, Patrick. For the quarter ended March 31, 2026, the company generated 17.6 million dollars in investment income. An increase of 0.1 million dollars as compared to 17.5 million dollars reported for the quarter ended December 31, 2025.

Speaker #4: Accordingly, our net investment income for the first quarter of 2026 was $6.9 million, or 55 cents per share, which constitutes a decrease of 0.5 million or 2 cents per share from 7.4 million or 57 cents per share reported for the prior quarter.

Brandon Satoren: Accordingly, our net investment income for Q1 2026 was $6.9 million or $0.55 per share, which constitutes a decrease of $0.5 million or $0.02 per share from $7.4 million or $0.57 per share reported for the prior Q4. Core net investment income for Q1 was $4.1 million or $0.33 per share, compared to $4.1 million or $0.32 per share for Q4 2025. As of 31 March 2026, our net asset value, or NAV, totaled $193 million, a decrease of $16.2 million or 7.7% from the prior Q4 NAV of $209.2 million.

Speaker #1: For the same period, expenses were 10.7 million dollars. A 0.6 million dollar increase as compared to 10.1 million dollars reported for the prior quarter.

Speaker #4: Core net investment income for the first quarter was $4.1 million, or 33 cents per share, compared to $4.1 million or 32 cents per share for the fourth quarter of 2025.

Speaker #1: The increase in expense was primarily due to the increase in incentive fees driven by higher investment income in the current quarter, as well as elevated general and administrative expenses.

Speaker #4: As of March 31, 2026, our net asset value, or NAV, totaled $193 million. A decrease of 16.2 million or 7.7% from the prior quarter NAV of $209.2 million.

Speaker #1: Accordingly, our net investment income for the first quarter of 2026 was 6.9 million dollars, or 55 cents per share, which constitutes a decrease of 0.5 million dollars, or 2 cents per share, from 7.4 million dollars, or 57 cents per share, reported for the prior quarter.

Speaker #4: On a per-share basis, NAV was $15.60 as of March 31, 2026, representing a $1.08 decrease or 6.5% as compared to the prior quarter's NAV per share of $16.68.

Brandon Satoren: On a per share basis, NAV was $15.60 as of 31 March 2026, representing a $1.08 decrease or 6.5% as compared to the prior quarter's NAV per share of $16.68. As Ted noted, the decline in NAV during the quarter was primarily driven by unrealized depreciation on the portfolio. While those markdowns were meaningful, they were largely concentrated in the software and software exposed portfolio and were driven by broader indiscriminate market volatility in the sector. Management does not believe the majority of these markdowns reflect deterioration in underlying credit performance or fundamentals of such companies. As of 31 March 2026, our gross and net leverage ratios were 1.8x and 1.5x respectively, compared to 1.5x and 1.4x in the prior quarter.

Speaker #1: Core net investment income for the first quarter was 4.1 million dollars, or 33 cents per share, compared to 4.1 million dollars, or 32 cents per share, for the fourth quarter of 2025.

Speaker #4: As Ted noted, the decline in NAV during the quarter was primarily driven by unrealized depreciation on the portfolio. While those markdowns were meaningful, they were largely concentrated in the software and software-exposed portfolio.

Speaker #1: As of March 31, 2026, our net asset value, or NAV, totaled $193 million. A decrease of 16.2 million or 7.7% from the prior quarter NAV of $209.2 million.

Speaker #4: And were driven by broader indiscriminate market volatility in the sector. Management does not believe the majority of these markdowns reflected deterioration in underlying credit performance or fundamentals of such companies.

Speaker #1: On a per-share basis, NAV was $15.60 as of March 31, 2026, representing a $1.08 decrease, or 6.5%, as compared to the prior quarter's NAV per share of $16.68.

Speaker #4: As of March 31, 2026, our gross and net leverage ratios were 1.8 times and 1.5 times, respectively, compared to 1.5 times and 1.4 times in the prior quarter.

Speaker #1: As Ted noted, the decline in NAV during the quarter was primarily driven by unrealized depreciation on the portfolio. While those markdowns were meaningful, they were largely concentrated in the software and software-exposed portfolio, and were driven by broader, indiscriminate market volatility in the sector.

Speaker #4: The quarter-over-quarter increase was primarily reflected the timing of our March issuance of $50 million of 7.5% notes due 2029, ahead of the April 27 partial redemption of the LRFC 2026 notes for $40 million.

Brandon Satoren: The quarter over quarter increase was primarily reflected the timing of our March issuance of $50 million of 7.5% notes due 2029 ahead of the 27 April partial redemption of the LRFC 2026 notes for $40 million, which temporarily elevated quarter-end borrowings. Excluding the $40 million of 2026 notes we called in March and repaid in April, our gross and net leverage ratios were 1.6x and 1.5x respectively. Importantly, this financing transaction largely de-risked our remaining 2026 maturities, further staggered our maturity ladder, diversified our funding base, and provided additional financial flexibility. Specifically, we ended the quarter with $342.2 million of borrowings outstanding at a weighted average contractual interest rate of 6.9%.

Speaker #1: Management does not believe the majority of these markdowns reflected deterioration in underlying credit performance or fundamentals of such companies. As of March 31, 2026, our gross and net leverage ratios were 1.8 times and 1.5 times, respectively, compared to 1.5 times and 1.4 times in the prior quarter.

Speaker #4: Which temporary elevated temporarily elevated quarter-end borrowings. Excluding the $40 million of 2026 notes we called in March and repaid in April, our gross and net leverage ratios were 1.6 times and 1.5 times, respectively.

Speaker #4: Importantly, this financing transaction largely de-risked our remaining 2026 maturities, further staggered our maturity ladder, diversified our funding base, and provided additional financial flexibility. Specifically, we ended the quarter with $342.2 million of borrowings outstanding at a weighted average contractual interest rate of 6.9%.

Speaker #1: The quarter-over-quarter increase was primarily reflected the timing of our March issuance of $50 million of 7.5% notes due 2029, ahead of the April 27 partial redemption of the LRFC 2026 notes for $40 million.

Speaker #1: Which temporary elevated temporarily elevated quarter-end borrowings. Excluding the $40 million of 2026 notes, we called in March and repaid in April our gross and net leverage ratios were 1.6 times and 1.5 times, respectively.

Speaker #4: When excluding the April $40 million partial redemption of the LRFC 2026 notes compared to $312 million of borrowings outstanding at a weighted average contractual interest rate of 6.7% in the prior quarter.

Brandon Satoren: When excluding the April $40 million partial redemption of the LRFC 2026 notes, compared to $312 million of borrowings outstanding at a weighted average contractual interest rate of 6.7% in the prior quarter. We also finished the quarter with $69.8 million of available borrowing capacity under our senior secured. Ahead of questions, I'd like to re-emphasize our commitment to our shareholders. Our focus remains on active portfolio management, disciplined underwriting, and diligent capital management, with the goal of delivering sustainable long-term value creation for our shareholders. Thank you once again to all of our shareholders, employees, and partners for your ongoing support. This concludes our prepared remarks, and I'll turn the call over for any questions.

Speaker #1: Importantly, this financing transaction largely de-risked our remaining 2026 maturities, further staggered our maturity ladder, diversified our funding base, and provided additional financial flexibility. Specifically, we ended the quarter with $342.2 million of borrowings outstanding at a weighted average contractual interest rate of 6.9%.

Speaker #4: We also finished the quarter with $69.8 million of available borrowing capacity under our senior secured. Ahead of questions, I'd like to re-emphasize our commitment to our shareholders.

Speaker #4: Our focus remains on active portfolio management, disciplined underwriting, and diligent capital management, with the goal of delivering sustainable long-term value creation for our shareholders.

Speaker #1: When excluding the April $40 million partial redemption of the LRFC 2026 notes, compared to $312 million of borrowings outstanding at a weighted average contractual interest rate of 6.7% in the prior quarter, we also finished the quarter with $69.8 million of available borrowing capacity under our senior secured.

Speaker #4: Thank you once again to all of our shareholders, employees, and partners for your ongoing support. This concludes our prepared remarks and I'll turn the call over for any questions.

Speaker #5: Thank you. As a reminder to ask a question, you will need to press star then the number one on your telephone keypad. And if you would like to withdraw your question, press star one again.

Operator: Thank you. As a reminder, to ask a question, you will need to press star then the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Erik Zwick with Lucid Capital Markets. Please go ahead.

Speaker #5: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Eric Zwick, with Lucid Capital Markets.

Speaker #5: Please go ahead.

Speaker #6: Thank you. Good morning, guys. Wanted to start with a question on the unrealized depreciation and you mentioned if you kind of include software exposed, it was about 70% of the unrealized depreciation was driven by software and software exposed.

Erik Zwick: Thank you. Good morning, guys. Wanted to start with a question on the unrealized depreciation. You mentioned, if you kind of include software exposed, it was about 70% of that unrealized depreciation was driven by software and software exposed. I'm curious, you know, if you could talk a little bit more in depth about which particular inputs to your valuation models drove the valuation change. I guess I'm just curious, you know, if you look at what, you know, public equity markets have done in April and in early May here, we've certainly seen, you know, a rebound there. I'm curious if that may have, you know, if things were to stay that way, if we'd potentially see a little bit of unwinding of that depreciation that you experienced in Q1.

Speaker #6: So I'm curious if you could talk a little bit more in depth about which particular inputs to your valuation models drove the valuation change and I guess I'm just curious if you look at what public equity markets have done in April and early May here, we've certainly seen a rebound there and curious if that may have if things were to stay that way, if we'd potentially see a little bit of unwinding of that depreciation that you experienced in one queue.

Speaker #3: Yeah. Hey, Eric, can you hear us? Okay. Sorry, we're having some issues with our phone here. So yeah, to take a question a couple of different steps.

Brandon Satoren: Yeah. Hey, Erik, can you hear us?

Erik Zwick: Yes, I can.

Brandon Satoren: Okay. Sorry, we're having some issues with our phone here. To take question a couple different steps. Like as an example, one of the names sort of within that unrealized is like a healthcare kind of data analytics business. It's a third-party valuation that's done on it. One of the inputs, because we own some amount of the overall exposure that we have in the company is an equity security. The third-party valuation firm looks at comps in the space, and the comp set that they use is sort of healthcare IT type comparables. Between December 31st and March 31st, the multiples for that sector or the multiples kind of for the comp set declined.

Speaker #3: As an example, one of the names sort of within that unrealized is a healthcare kind of data analytics business. And it's a third-party valuation that's done on it, but one of the inputs, because we own some amount of the overall exposure that we have in the company, is an equity security.

Speaker #1: Employees and Partners for your ongoing support. This concludes our Portman Ridge for any questions.

Speaker #3: Thank you. As a reminder, to ask a question, feel free to press start at the number one. Your telephone can be read. And if you would like to rejoin the question, press follow again.

Speaker #3: And so the third-party valuation firm looks at comps in the space and the comp set that they use is sort of healthcare, IT-type comparables.

Speaker #3: We will log for just a moment. Compile the Q&A roster. Your first question comes from the line of every week with Lucy at the market.

Speaker #3: And so between December 31st and March 31st, the multiples for that sector and the multiples kind of for the comp set declined. And so the multiple compressed by, I want to say, like three-quarters of a term.

Speaker #3: Please go ahead.

Speaker #4: Thank you. Good morning, guys. Let me just start with a question. Unrealized depreciation you mentioned kind of software. So during the time, a little bit more data about which particular investors drove the valuation change and.

Patrick Schafer: You know, the multiple compressed by, I wanna say like three-quarters of a term. That kind of drove some of the unrealized. To your point, again, assuming some of that stuff rebounds, or kind of rebounds by the time we get to 30 June, you would expect some of that to return. I would say though, the biggest impact broadly within sort of both software and software exposed is really where there is a public security in the capital structure. We either own a first lien that is quoted, and we mark to market and, maybe not obviously, but obviously the BSL market has been very challenged for software in the Q1 through March.

Speaker #3: And so that kind of drove some of the unrealized. So to your point, I think, again, assuming some of that stuff rebounds or kind of rebounds by the time we get to 6:30, you would expect some of that to return.

Speaker #3: I would say, though, the biggest impact broadly within sort of both software and software exposed is really where there is a public security in the capital structure.

Speaker #3: So we'll either own a first lien that is quoted and so we mark to market and maybe not obviously, but obviously the BSL market has been very challenged for software in the quarter through March.

Speaker #3: And so a lot of that movement is price. On that security, but another example would be if we have a second lien non-quoted security or a private security, y, if there is a first lien in the capital structure that is also quoted, generally speaking, kind of our valuation firms use a relative value approach when valuing the rest of the capital structure.

Patrick Schafer: A lot of that movement is priced on that security. Another example would be if we have a second lien non-quoted security or a private security. If there is a first lien in the capital structure that is also quoted, generally speaking, kind of our valuation firms use a relative value approach when valuing the rest of the capital structure. The markdown in the first lien, even though it's just kind of a quoted mark, also has an impact and pushes out our discount rate, kind of applied to other securities in the capital structure.

Speaker #3: So the markdown in the first lien, even though it's just kind of a quoted mark, also has an impact and pushes out our discount rate kind of applied to other securities in the capital structure.

Speaker #6: Great. That's helpful. Thanks, Patrick. And then noted a couple of the kind of the funding changes you made with some of the redemptions, the new issues, and just curious if you could kind of refresh me on your targeted leverage range at this point and if there's any other kind of leverage you have to pull to reach that target if you're not there today.

Erik Zwick: Great. That's helpful. Thanks, Patrick. You know, noted a couple of the kind of the funding changes you made with some of the redemptions, the new issues. Just curious if you could kind of refresh me on your targeted leverage range at this point, and if there's any other kind of, you know, leverage you have to pull to, you know, reach that target if you're not there today.

Speaker #3: Yeah. Our is back again. And Brandon can I'll talk about the targets and if there's anything more specific Brandon can kind of talk about the individual inputs.

Patrick Schafer: Our, our, it's Patrick again. Brandon can I'll talk about the targets, and if there's anything more specific, Brandon can kind of talk about the individual inputs. You know, our target range remains sort of 1.25 to 1.4 times leverage on a net basis. We're sort of at the high end of that. As you kind of saw in Q1, you know, we think there is a still a pretty robust or a pretty ordinary course in kind of normal market condition M&A environment.

Speaker #3: But our target range remains sort of one and a quarter to 1.4 times leverage on a net basis. We're sort of at the high end of that.

Speaker #3: But as you kind of saw in Q1, we think there is a still a pretty robust or a pretty ordinary course in kind of normal market condition M&A environment.

Speaker #3: So we would expect just kind of to have a little bit of natural deleveraging as a couple of deals that sort of we know are in the process of sort of being refinanced out and we're kind of comfortable getting taken out of those names and don't want to kind of continue on with those portfolio companies kind of as that sort of naturally rotates in Q2.

Patrick Schafer: You know, we would expect just kind of to have a little bit of natural de-levering as a couple of deals that sort of we know are in the process of sort of being refinanced out, and we're kind of comfortable getting taken out of those names and don't wanna kind of continue on with those portfolio companies kind of as that sort of naturally rotates in Q2. You know, you'd kind of expect to see that. We don't, we don't think there's any real leverage specifically we need to pull on the liability side. It's just gonna kind of be naturally the portfolio churning.

Speaker #3: You'd kind of expect to see that. So we don't think there's any real leverage specifically we need to pull on the liability side. It's just going to kind of be naturally the portfolio journey.

Speaker #6: Yeah, that's right. And last one. Yeah, go ahead, Brandon.

Erik Zwick: Yeah, that's great. Last one.

Speaker #4: I was just going to say, Eric, it obviously spiked a little bit at quarter end as a result of the broader market volatility and some of the unrealized depreciation that we had to take because of the software sell-off.

Ted Goldthorpe: And then-

Ted Goldthorpe: Yeah, go ahead, Brandon Satoren.

Ted Goldthorpe: I was just gonna say, Erik, it obviously spiked a little bit at quarter end as a result of the, you know, the broader market volatility and some of the unrealized depreciation that we had to take because of the software sell-off.

Speaker #6: Yeah. Yes. Yep. Understood. And last one, I think it was Ted in your comments. You mentioned some optimism around the pipeline as you look at it today.

Erik Zwick: Yes. Yep, understood. Last one, I think it was Ted, in your comments, you mentioned some optimism around, you know, the pipeline as you look at it today. Wondering if you could talk a little bit just, you know, maybe on two points. One, what you're seeing in terms of spreads today, for new opportunities relative to the existing portfolio yield and also just from a kind of, you know, industry and sector perspective, if there's any particular areas of opportunity that you feel are, you know, more attractive today.

Speaker #6: And wondering if you could talk a little bit just maybe on two points. One, what you're seeing in terms of spreads today for new opportunities relative to the existing portfolio yield and also just from a kind of industry and sector perspective if there's any particular areas of opportunity that you feel are more attractive today.

Speaker #3: Yeah, good question. I would say on the sector-specific stuff, we're actually really as a firm very focused on sector specialization. But I wouldn't say there's any broad theme.

Ted Goldthorpe: Yeah, good question. I would say on the, on the sector specific stuff, you know, we're actually really, as a firm, very focused on sector specialization. I wouldn't say there's any broad theme. You know, like in the last I would say the market's definitely slowed the last couple weeks given some of the volatility. We're seeing spreads wider actually in middle market credit. We probably have had like 50 basis points of spread widening, and obviously, you know, that's not what you're seeing in the liquid markets. It's like the opposite. Like the high yield market's tighter today than where it was pre-Iran.

Speaker #3: In the last, I would say, the market's definitely slowed the last couple of weeks given some of the volatility. And we're seeing spreads wider, actually, in middle market credit.

Speaker #3: So we probably have had like 50 basis points of spread widening. And obviously, we haven't that's not what you're seeing in the liquid markets.

Speaker #3: It's like the opposite. So the high-yield market's tighter today than where it was pre-Iran. But I think there's a lot I think the bar for new investments has gone up in the industry in private credit.

Ted Goldthorpe: you know, I think there's a lot. I think the bar for new investments has gone up in the industry, like in private credit. I think people are kinda like thinking about capital optimization. I think we're pretty optimistic that spreads will either go wider or stay relatively where they are.

Speaker #3: And I think people are kind of thinking about capital optimization. So I think it I think we're pretty optimistic that spreads will either go wider or stay relatively where they are.

Speaker #6: Thanks for taking my questions today.

Erik Zwick: Thanks for taking my questions today.

Speaker #3: Thanks.

Ted Goldthorpe: Thanks.

Speaker #1: Your next question comes from the line of Christopher Nolan with Ladenberg Fellman. Please go ahead.

Operator: Your next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please go ahead.

Speaker #6: Hey, guys. On the software exposure, that's the BDC's second largest industry exposure. And I note that fair value is now 75% of cost versus for that sector versus 82% last quarter.

Christopher Nolan: Hey, guys. On the software exposure, that's the BDC's second-largest industry exposure. I note that fair value is now 75% of cost versus, for that sector, versus 82% last quarter. If you're using outside valuation firms for this, does this simply reflect M&A events happening in software where people are just trying to run for the exits on an M&A?

Speaker #6: And if you're using outside valuation firms for this, does this simply reflect M&A events happening in software where people are just trying to run for the exits in an M&A?

Speaker #3: The way I describe the software situation is there's a huge dichotomy for where private credit players are valued and where private equity is valued.

Ted Goldthorpe: The way I describe the software situation is there's a huge dichotomy for where private credit players are valued and where private equity is valued. If you look at where private equity is carrying certain of these assets, it implies a very, very low Like I'm speaking purely valuation-wise. It shows a very, very big buffer in terms of downside protection. Now again, I would probably estimate a lot of those valuations will have to come down. The reason you're seeing a dichotomy across private credit players and software and valuations is it's what Patrick mentioned earlier. The liquid markets have been very punitive on software, and a lot of it's to do with risk around LME and things that don't really impact, you know, don't come into play in a private credit situation.

Speaker #3: So if you look at where private equity is carrying certain of these assets, it implies a very, very I'm speaking purely valuation-wise. It shows a very, very big buffer in terms of downside protection.

Operator: Welcome to the conference center. Please wait.

Operator: Thank you for calling. May I have your conference ID number or the name of your call, please? Thank you for calling. May I have your conference ID number or the name of your call, please?

Speaker #3: Now, again, I would probably estimate a lot of those valuations will have to come down. The reason you're seeing a dichotomy across private credit players and software and valuations is it's what Patrick mentioned earlier.

David Brown: Five one five four nine six one.

Speaker #3: The liquid markets have been very punitive on software. And a lot of it's to do with risk around LME and things that don't really impact or don't come into play in a private credit situation.

A little bit just uh you know maybe on on 2 points 1, what you're seeing in terms of spreads today uh for New Opportunities relative to the, the existing portfolio yield and also just from a kind of, you know, industry and sector perspective because there's any particular, uh, areas of opportunity to that you feel are um, you know, more attractive today.

Operator: May I have the spelling of your first and last name?

David Brown: David, D-A-V-I-D, and Brown, B-R-O-W-N.

Operator: May I have your company name?

Speaker #3: So we had certain securities that are illiquid that we originated, but they happen to have a security in the capital structures that's liquid. And so when that happens, you see a huge dichotomy in valuations between capital structures that are 100% private versus those that have a little bit of liquid securities in them.

David Brown: Aiera, A-I-E-R-A.

Ted Goldthorpe: We had certain securities that are illiquid that we originated, but they happen to have a security in the capital structure that's liquid. When that happens, you see a huge dichotomy in valuations between capital structures that are 100% private versus those that have a little bit of liquid securities in them. Fundamentally, I mean, our software portfolio is performing very well. Like it's, you know, revenues are up, generating cash. I'm not saying there's not gonna be issues. The biggest problem that we see is two things. One is access to credit. Who's gonna refinance all this stuff? 'Cause, you know, all the most people have come out and are trying to reduce software exposure. Number two is no exits.

Operator: Thank you. I'll connect you. Welcome to BCP Investment Corporation's Q1 ended 31 March 2026 Earnings Conference Call. An earnings press release was distributed yesterday, 7 May, after market close. A copy of the release, along with an earnings presentation, is available on the company's website at www.bcpinvestmentcorporation.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.

Speaker #3: So again, fundamentally, I mean, our software portfolio is performing very well. It's revenues are up, generating cash. And again, I'm not saying there's not going to be issues.

Speaker #3: The biggest problem that we see is two things. One is access to credit. So who's going to refinance all this stuff? Because most people have come out and are trying to reduce software exposure.

Speaker #3: And then number two is no exits. It's going to be very difficult. Exit environment for these companies. And so it's probably going to reduce the velocity of our book in that sector.

Yeah, good question. I would say on the, on the sector specific stuff, you know, we're actually really uh as a firm very focused on sector specialization. Um, but I wouldn't say there's any broad theme, you know? Like, in the last I would say the Market's definitely slowed the last couple weeks given some of the volatility. Um and we're seeing spreads wider actually in uh Middle Market credits. So we probably had like 50 basis points of spread widening. And obviously we haven't you know, that's not what you're seeing in the liquid markets, it's like the opposite. So like the high yield Market's tighter today than where it was pre-arranged. Um, but you know, I think I think there's a lot. I think the bar for new Investments has gone up, um, in the industry like in private credit, and I think people are kind of like thinking about Capital optimization. So I think I think it I I think we're pretty optimistic that spreads will either go wide or stay relatively where they are.

Ted Goldthorpe: You know, it's gonna be very difficult exit environment for these companies, it's probably gonna reduce the velocity of our book in that sector. You know, I just don't see a big wave of software sales over the next 12 months.

Thanks for taking my questions today.

Speaker #3: I just don't see a big wave of software sales over the next 12 months.

Thanks.

Speaker #6: Yeah. No, it actually raises the interesting question. If this is a potential and I highlight potential stress point in private credit, what does that mean for the private equity sector in general?

it comes from the line of

Christopher Nolan: Yeah. No, it actually raises an interesting question. If this is a potential, and I highlight potential stress point in private credit, what does that mean for the private equity sector in general? If private credit gets a cold, private equity's getting pneumonia.

Christopher Nolan with Ladenburg FMAN, please go ahead.

Speaker #6: Because if private credit gets a cold, private equity is getting pneumonia.

Speaker #3: Yeah. Yeah.

Speaker #6: All right. Catch up with you later. Thanks.

Ted Goldthorpe: Yeah. Yeah.

Speaker #3: Thanks, Chris.

Christopher Nolan: All right. Catch up with you later. Thanks.

Hey guys um on the software exposure that's um the pdc's, second largest industry, exposure and I note that fair value is now 75% of cost versus for that sector versus 82% last quarter.

Ted Goldthorpe: Thanks, Chris.

Speaker #1: There are no further questions at this time. I will now turn the call back over to Ted Goldthorpe for any closing comments.

Operator: There are no further questions at this time. I will now turn the call back over to Ted Goldthorpe for any closing comments.

Speaker #3: Thank you all for attending our call. As always, please feel free to reach out to us with any questions, which we're happy to discuss.

And if you're using outside valuation firms for this does, this simply, uh, reflect, um, m&a events happening in software where people are just trying to run for the exit. So the m&a,

Ted Goldthorpe: Thank you all for attending our call. As always, please feel free to reach out to us with any questions, which we're happy to discuss. We look forward to speaking to you again in August when we announce our Q2 2026 results. Thank you so much and have a great weekend.

Speaker #3: We look forward to speaking to you again in August when we announce our second quarter 2026 results. Thank you so much, and have a great weekend.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Um the way I describe the software situation is there's a huge dichotomy for where private credit players are are valued and where private Equity is valued. So if you look at where private Equity is caring, certainly these assets, um it implies a very very low, I'm speaking purely valuation wise it. It it shows up very, very big buffer in terms of um, downside protection. Now, again, we I, I, I would probably estimate a lot of those valuations will have to come down

Um, the reason you're seeing that dichotomy across private credit players and software and valuations is it's what Patrick mentioned earlier. The liquid markets have been very punitive on, uh, software, and a lot of it's to do with risk around LME and things that don't really impact, you know, don't come into play in a private credit situation. Um, so we had certain securities that are illiquid that we originated, but they happen to have a security in the capital structure that's liquid, and so when that happens you see a huge dichotomy in valuations between capital structures that are 100% private versus those that have a little bit of liquid securities in them.

So again fundamentally I mean our software portfolio is performing very well like it's you know revs are up generating cash. And again I'm not saying there's there's not going to be issues the biggest problem that we see is 2. Things 1 is access to credit. So who's going to refinance all this stuff? Because you know all the most people have come out and are trying to reduce upper exposure

And then number two is no exits. You know, it's going to be a very difficult exit environment for these companies, and so it's probably going to reduce the velocity of our book in that sector. You know, I just don't see a big wave of software sales over the next 12 months.

Yeah, now it actually raises the interesting question: if this is a potential—and I highlight, potential—stress point in private credit, what does that mean for the private equity sector in general?

Because of private credit gets a cold private Equity is getting pneumonia.

Yeah, yeah, all right. Um, catch up with you later. Thanks.

Thanks Chris.

There are no further questions at this time. I will now turn the call back over to that, go to for any closing comments.

Thank you all for attending our call. As always, please feel free to reach out to us with any questions, which we're happy to discuss. We look forward to speaking to you again in August, when we announced our second quarter 20226 results. Thank you so much and have a great weekend.

Speaker #3: disconnect. Welcome to BCP Investment Corporation's first quarter ended March 31, 2026 earnings conference call. An earnings press release was distributed yesterday, May 7th, after market close.

And, gentlemen, that concludes today's call. Thank you all.

now, this connect

Speaker #3: A copy of the release along with an earnings presentation is available on the company's website at www.bcpinvestmentcorporation.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC.

Speaker #3: As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance or results, and involve a number of risks and uncertainties.

Speaker #3: Actual results may differ materially from those in the forward-looking statements, as a result of a number of factors including those described in the company's filings with the SEC.

Speaker #3: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Galtorp, Chief Executive Officer President and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer and Patrick Schafer, Chief Investment Officer.

Speaker #3: With that, I would now like to turn the call over to Ted Galtorp, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Speaker #2: Good morning. Welcome to our first quarter, 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer.

Speaker #2: We also saw improvement in underlying credit performance with non-accruals declining to $6.2% of the portfolio at amortized cost from $7.1% in the prior quarter and the number of portfolio companies on non-accrual declining to 9 from 10.

Speaker #2: In addition, our board approved a third quarter 2026 base distribution of $0.27 per share payable in monthly installments of $0.09 per share in July/August and September.

Speaker #2: We believe the majority of these markdowns reflect sector-specific valuation pressure and broader mid-market dislocation rather than fundamental credit deterioration. Importantly, underlying credit performance remained relatively stable as most of our software exposure is in mission-critical, vertically specialized businesses that we believe are well-positioned to weather the current AI-driven uncertainty.

Speaker #2: As noted last quarter, we have begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026.

Speaker #2: With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Speaker #3: Thanks, Ted. Before getting into the specifics of the quarter, I would like to make a few comments on our core market as a whole.

Operator: Welcome to BCP Investment Corporation's Q1 ended 31 March 2026 Earnings Conference Call. An earnings press release was distributed yesterday, 7 May 2026, after market close. A copy of the release, along with an earnings presentation, is available on the company's website at www.bcpinvestmentcorporation.com in the investor relations section and should be reviewed in conjunction with the company's Form 10-Q filed yesterday with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.

Operator: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation; Brandon Satoren, Chief Financial Officer; and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Operator: BCP Investment Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of BCP Investment Corporation, Brandon Satoren, Chief Financial Officer, and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of BCP Investment Corp. Please go ahead, Ted.

Ted Goldthorpe: Good morning. Welcome to our Q1 2026 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer. Following my opening remarks on the company's performance and activities during Q1, Patrick will provide commentary on our investment portfolio and our markets, and Brandon will discuss our operating results and financial condition in greater detail. 2025 was an important year of execution for us, and we entered 2026 on stronger footing. The key strategic and shareholder-focused actions we outlined in connection with the Logan Ridge merger are now largely in place, including our rebranding, tender offer, share repurchase program, and transition to monthly dividends, while preserving flexibility for the quarterly supplemental distributions. We also executed liability management actions that diversified our funding base and extended our maturity profile.

Ted Goldthorpe: Taken together, these actions have improved our financial flexibility, reduced near-term refinancing risk, and better position the company to support more consistent shareholder return framework and long-term value creation. During the quarter, we continued to execute against our plan and deliver growth in both total investment income and core investment income relative to the prior quarter and Q1 2025. We generated net investment income of $6.9 million, or $0.55 per share, which exceeded our base distribution, and our share repurchase activity in Q1 2026 was accretive to NAV by $0.07 per share. We also saw improvement in underlying credit performance, with non-accruals declining to 6.2% of the portfolio at amortized cost from 7.1% in the prior quarter, and the number of portfolio companies on non-accrual declining to nine from 10.

Ted Goldthorpe: Reflecting that earnings profile, our board declared a supplemental cash distribution of $0.03 per share for Q2, bringing total Q2 distributions to $0.30 per share. In addition, our board approved a Q3 2026 base distribution of $0.27 per share, payable in monthly installments of $0.09 per share in July, August, and September. With our monthly dividend structure now in place and the first monthly distribution paid in April, we believe this framework provides shareholders with a more regular cadence of cash distributions while maintaining flexibility to declare supplemental distributions when supported by earnings. We also continue to enhance our capital structure through proactive liability management.

Ted Goldthorpe: During Q1, we issued $50 million of 7.5% notes due 2029, and in April, used a portion of the proceeds to redeem $40 million of the LRFC 5.25% notes due 2026. These actions further diversified our funding base, extended our maturity profile, and enhanced our financial flexibility. Turning to Net Asset Value. Net Asset Value declined during the quarter, driven primarily by unrealized markdowns on our portfolio. Approximately 40% of the quarter's unrealized markdowns were attributable to investments classified as software and our consolidated scheduled investments, and approximately 70% when including software or AI exposed names. Furthermore, 70% of these markdowns are from portfolio investments without at least one publicly quoted security, which negatively impacted the valuation of all securities in the capital structure.

Ted Goldthorpe: We believe the majority of these markdowns reflect sector-specific valuation pressure and broader middle market dislocation rather than fundamental credit deterioration. Importantly, underlying credit performance remained relatively stable as most of our software exposure is in mission-critical, vertically specialized businesses that we believe are well-positioned to weather the current AI-driven uncertainty. Despite continued macroeconomic uncertainty and volatility in portions of the software market, we remain disciplined in our deployment across the lower middle market, prioritizing credit quality, strong documentation, and downside protection. We continue to see more attractive opportunities in smaller and more complex transactions where structure and selectivity are critical, and we are actively managing and reposition the portfolio in response to evolving market conditions. Competition remains more pronounced in larger and more commoditized transactions, which reinforces our focus on selectivity over volume.

Ted Goldthorpe: As we look ahead, we remain focused on active portfolio management, disciplined underwriting, and prudent capital allocation, with the goal of driving long-term value for shareholders. As of the last quarter, we've begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026. With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Ted Goldthorpe: As we look ahead, we remain focused on active portfolio management, disciplined underwriting, and prudent capital allocation with the goal of driving long-term value for shareholders. As of the last quarter, we've begun to see increased M&A activity and expect to capitalize on opportunities in our pipeline throughout the remainder of 2026. With that, I will turn the call over to Patrick Schafer, our Chief Investment Officer, for a review of our investment activity.

Patrick Schafer: Regardless of industry, we continue to focus on our core market of 15 to 50 of EBITDA in industries or business models where we have an edge and ideally non-sponsored or non-traditionally sponsored transactions where competition is lower and we have the ability to drive pricing and structure. During Q1 of 2026, our investment activity remained measured and selective. We completed 2 new portfolio investments and 1 follow-on investment during the period. At the same time, we experienced a higher level of repayments and sales, which we believe is consistent with a more active realization environment and the increased M&A activity that Ted and myself mentioned earlier. As a result, originations for the quarter were $13.3 million, and repayments and sales were $28.3 million, resulting in net repayments and sales of approximately $15 million.

Patrick Schafer: Turning to slide 11 of our presentation. The overall yield on par of new investments during the quarter was 10.7%. This compares to 12.8% weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations as of 31 March 2026. Given the limited number of transactions completed during the quarter, we view the yield on new investments in the context of the specific mix of deals executed rather than as a broader indicator of the opportunity set. Our focus remains on credit quality, structure, and overall risk-adjusted return. Our investment portfolio as of 31 March 2026 remained highly diversified. We ended the quarter with a debt investment portfolio, excluding our investments in CLO funds, equities, and joint ventures, spread across 72 different portfolio companies and 33 different industries, with an average par balance of $3.3 million per investment.

Brandon Satoren: Thanks, Patrick. For Q1 ended 31 March 2026, the company generated $17.6 million in investment income, an increase of $0.1 million as compared to $17.5 million reported for Q4 ended 31 December 2025. For the same period, expenses were $10.7 million, a $0.6 million increase as compared to $10.1 million reported for the prior quarter. The increase in expenses was primarily due to the increase in incentive fees driven by higher investment income in the current quarter, as well as elevated general and administrative expenses.

Brandon Satoren: Accordingly, our net investment income for Q1 2026 was $6.9 million, or $0.55 per share, which constitutes a decrease of $0.5 million, or $0.02 per share, from $7.4 million or $0.57 per share reported for the prior quarter. Core net investment income for Q1 was $4.1 million, or $0.33 per share, compared to $4.1 million, or $0.32 per share for Q4 2025. As of 31 March 2026, our net asset value, or NAV, totaled $193 million, a decrease of $16.2 million or 7.7% from the prior quarter NAV of $209.2 million.

Brandon Satoren: On a per share basis, NAV was $15.60 as of 31 March 2026, representing a $1.08 decrease, or 6.5% as compared to the prior quarter's NAV per share of $16.68. As Ted noted, the decline in NAV during the quarter was primarily driven by unrealized depreciation on the portfolio. While those markdowns were meaningful, they were largely concentrated in the software and software-exposed portfolio and were driven by broader indiscriminate market volatility in the sector. Management does not believe the majority of these markdowns reflect deterioration in underlying credit performance or fundamentals of such companies. As of 31 March 2026, our gross and net leverage ratios were 1.8x and 1.5x respectively, compared to 1.5x and 1.4x in the prior quarter.

Brandon Satoren: The quarter-over-quarter increase was primarily reflected in the timing of our March issuance of $50 million of 7.5% notes due 2029 ahead of the April 27 partial redemption of the LRFC 2026 notes for $40 million, which temporarily elevated quarter-end borrowings. Excluding the $40 million of 2026 notes we called in March and repaid in April, our gross and net leverage ratios were 1.6 times and 1.5 times, respectively. Importantly, this financing transaction largely de-risked our remaining 2026 maturities, further staggered our maturity ladder, diversified our funding base, and provided additional financial flexibility. Specifically, we ended the quarter with $342.2 million of borrowings outstanding at a weighted average contractual interest rate of 6.9%.

Brandon Satoren: The quarter over quarter increase was primarily reflected the timing of our March issuance of $50 million of 7.5% notes due 2029 ahead of the 27 April partial redemption of the LRFC 2026 notes for $40 million, which temporarily elevated quarter-end borrowings. Excluding the $40 million of 2026 notes we called in March and repaid in April, our gross and net leverage ratios were 1.6 times and 1.5 times respectively. Importantly, this financing transaction largely de-risked our remaining 2026 maturities, further staggered our maturity ladder, diversified our funding base, and provided additional financial flexibility. Specifically, we ended the quarter with $342.2 million of borrowings outstanding at a weighted average contractual interest rate of 6.9%.

Ted Goldthorpe: I have a question. Like we have decided to maintain our shareholders between portfolio management, discipline underwriting, and capital management with the goal of delivering sustainable long-term value creation for our shareholders. Thank you once again to all of our shareholders, employees, and partners for your ongoing support. The speakers are prepared to remark on terms and policies for any questions.

Operator 2: Thank you. As a reminder, to ask a question, you'll need to press star then the 1 on your telephone keypad. If you would like to withdraw your question, press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Erik with Lucid Capital Markets. Please go ahead.

Operator: Thank you. As a reminder, to ask a question, you'll need to press star then the 1 on your telephone keypad. If you would like to withdraw your question, press star one again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Erik with Lucid Capital Markets. Please go ahead.

Erik Zwick: Thank you. Good morning, guys. I wanted to start with a question on the unrealized depreciation. You mentioned that you kind of software close to about 70% of that depreciation was coming from software and hardware. I'm curious if you can talk a little bit more in depth about which specific evaluation models and true evaluation changes.